BRITAIN’S high-street banks are clawing back huge profits from customers to offset losses from the credit crunch, according to results released last week.

Lloyds TSB, the UK’s fifth biggest bank, said on Friday that 2007 profits rose 6% to £3.92 billion, despite the financial turmoil.

A 12% fall in profits from its wholesale and international-banking arm – the division most exposed to the credit crunch – was offset by a 17% jump from its retail bank to £1.81 billion.

Lloyds has boosted its profits by pushing current accounts. It opened 1m new accounts last year, and take-up of “packaged accounts”, which can cost up to £300 a year in return for “benefits” such as travel insurance, leapt by an astonishing 79%.

The bank is set to squeeze its packaged-account customers even further from May, when the charge on its Gold Service account will be raised by 20% to £12 a month. The fee for its Platinum account is also going up by 13% to £17 a month.

It is a similar story at Barclays, where retail-banking profit rose 9% to £1.3 billion in 2007. The bank hiked the fee on its Premier Service current account for new customers from £10 a month to £25 in January.

Barclaycard, the UK’s largest credit-card provider, also boosted profits 18% to £183m – partly by discouraging customers who have a card but barely use it.

Paul Davies of Which?, the consumer group, said: “The banks are facing huge losses from the credit squeeze – so they in turn are squeezing customers in an attempt to make some of it back.”

Alliance & Leicester (A&L), meanwhile, revealed it made around £462m – almost two-thirds of its total revenue – from interest on current accounts, personal loans, mortgages and savings. It made another £118m from “cross-selling” insurance and long-term investment products and credit cards to savers.

Alex Potter, an analyst at stockbroker Collins Stewart, said: “The banks make money from the low interest rates they give on current accounts and the high interest they charge on personal loans. With current accounts, they can make a lot more on the wholesale markets then they offer to retail savers in interest.”

However, customers can make more than £1,000 a year by dumping products from the high street and switching to best-buy savings and current accounts. We show you how.

Dump your packaged accounts

Customers can save up to £300 by steering clear of premium accounts, which offer extra benefits such as insurance in return for the fee. Four in ten of the consumers who pay for a packaged account use none or only one of the features, said Which?

You can still get good interest rates without paying a monthly fee. Alliance & Leicester’s Premier Direct account, for example, pays 8.19% on balances up to £2,500 for the first year, and 4.5% after that.

Lloyds justified its fee hikes last week, saying it was improving its benefits package, though analysts question this.

Michelle Slade, of comparison site Moneyfacts, said: “Lloyds offers extra benefits in return for the higher fee – including an increase in mobile-phone insurance cover up to £2,000 and Air-miles if customers book holidays via the Lloyds TSB travel service.

“However, while these benefits can be quite attractive, you have to register for many of them and make sure they meet your needs. How beneficial is breakdown cover if it only covers you a limited distance from your home? Alternatively, how often do you lose your mobile?”

She added: “The savings you make would make from dumping this account would more than likely pay for some of these benefits independently with some money left over.”

Total saving: £300 a year Get a high interest current account

Some banks pay customers as little as 0.1% interest on their current accounts, and analysts said this is still one of the main ways that banks profit at our expense.

The banks generate revenues of £6.5 billion from current accounts, and three-quarters of this comes from paying derisory rates, according to research by investment bank Credit Suisse.

Banks have started to offer high-interest current accounts to attract new business, but even these generally stipulate that you pay in a certain amount a month, and limit the higher interest to a small portion of your balance.

For example, Halifax’s High Interest account pays 6.17%, but requires a deposit of at least £1,000 a month, and for balances of more than £2,500 you get just 0.1%.

If you want to earn a better rate on your entire balance, you could consider Cahoot, which pays 3.65%, or Intelligent Finance, the online arm of Halifax, which pays 2.75%.

Customers with a £1,500 balance would be at least £53 a year better off with a Cahoot account compared with a high-street bank paying just 0.1%, according to Which?

Total profit: £53 a year Switch your savings

With the average rate on high-street easy-access accounts at around 4.24% and as low as 3.85% on HSBC’s Flexible Saver, savers with a balance of £10,000 can pocket £220 a year by switching to a best buy such as ICICI’s market-leading account, paying 6.41%, or Brad-ford & Bingley’s account, paying 6.4%.

Total profit: £220 Move your Isas

The savings you could make by switching your cash Isas could be even bigger – especially as those of us who have been paying in the maximum since 1999 could have built up a balance of around £27,000.

The average Isa rate among the big five banks is 4.99% on balances of £3,000, rising to 5.37% on £18,000. But you could earn 6.3% with Scarbor-ough building society’s notice account or 6.25% with A&L. If you moved the £27,000 to Scar-borough from a bank you would earn nearly £250 extra a year.

Total profit: £250 a year Switch credit cards

It is not always the case that you should avoid the high street: Barclaycard’s Simplicity Visa card is a best buy for purchases with a rate of 6.8% compared with Halifax’s Classic, which charges 27.95%. On a £1,000 purchase, using Barclaycard will save you £211.

Halifax’s One card offers a bett-ter deal on balance transfers at 0% for 12 months on both transfers and purchases. It also has a 3% balance-transfer fee. After this, the standard rate is 15.9%.

If you transferred a balance of £5,000 and paid off the minimum balance each month, it would take you 38 years with the Halifax card, paying a total interest of £6,328.

The Barclaycard customer would pay only £1,631 and would clear the debt in 19 years and seven months.

Banks also catch you out with charges on overseas purchases and interest on cash withdrawals. Figures from Uswitch, a comparison site, show banks make £760m in charges from UK holi-daymakers using cards overseas.

However, Nationwide does not charge customers extra for using their credit card overseas.

Total saving: £211

OVERALL SAVING: £1,034

FOUR MANAGERS AND THEY CAN’T EVEN FIX A LOAN

LINDA DUBERLEY, 47, a communications consultant from southwest London, is a Barclays Premier customer, paying £10 a month for her own ‘relationship manager’ and access to a £20,000 loan facility.

However, when her first relationship manager left, Duberley was given four new managers in four years. She is now considering dumping the service after being rejected for a personal loan.

She said: ‘I hadn’t needed the loan before. But I could not even work out who my relationship manager was and then was initially rejected.

‘I was later put through to a call centre in Cardiff where they tried to sell me a home loan.’

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